The old adage applies to the banking and finance industry and there is no better instrument to illustrate this adage than the volatile contingent convertible bond
. Contingent convertible bonds
("CoCo bonds") are hybrid debt instruments.
In April, the Spanish central bank's restructuring fund FROB agreed to provide Banco CEISS with EUR604m (USD786.5m) of cash via a contingent convertible bond
issue, in a move to help the loss-making bank improve its capital ahead of the tie-up.Country: SpainSector: Banking/Financial ServicesType: MergerStatus: Agreed
Swiss banking group Credit Suisse Group AG (NYSE: CS) (ZHR: CSGN) (CSGN.VX) has been undertaking a road show for marketing its public contingent convertible bond
(coco) offering, which was expected to raise up to USD2bn, Dow Jones has reported, citing a person familiar with the situation.
HSBC Holdings Plc (LSE: HSBA) (NYSE: HBC) (HKG: 0005) is preparing to sell its first contingent convertible bond
following a global investor road-show, IFR has reported, citing a statement by the bank.
The bank is to redeem the contingent convertible bonds
on October 23.
Apart from losses for depositors, it also included the sale of the operations of Cypriot banks in Greece, the conversion of contingent convertible bonds
into equity and a temporary freeze of deposits.
This allowed the bank to repay outstanding state contingent convertible bonds
(CoCos) issued by EspanaDuero and held by the Fund for Orderly Bank Restructuring (FROB) and acquire the stake of the latter in EspanaDuero.
ADDITIONAL tier-1 (AT1) or contingent convertible bonds
(CoCos) were designed in the wake of the 2008 global financial crisis to provide sufficient capital to banks, reduce their risk of failure and ensure that investors rather than taxpayers bear the costs of rescuing a failing lender.
"DGB Financial Group plans to fund the deal with a mix of contingent convertible bonds
and corporate bonds which will increase the debt at the holding company," Moody's said in a statement.
It could also resume preparing models of how sovereign-debt restructuring could be better supported - whether at the national level, through GDP-linked or contingent convertible bonds
, or at the regional or global level.
The Hellenic Financial Stability FundAaAaAeAeAaAeAeA -- Greece's state-owned bailout fund -- will provide mone aid to the banks by purchasing a mix of new shares and contingent convertible bonds
,AaAaAeAeAaAeAeA which are designed to convert into share in the event a pre trigger is activated, the Greek government (http://www.bloomberg.com/news/articles/2015-11-02/greece-sets-terms-for-aiding-15-9-billion-bank-recapitalization) reportedly AaAaAeAeAaAeAeA said Sun